Telefonica offers new plans in Mexico to take on America Movil

The Mexican unit of Spanish telecom giant Telefonica SA launched a series of wireless products Thursday that Chief Executive Juan Abellan said are designed to draw millions of new users from rivals like market leader America Movil SAB by offering payment plans that charge by the second for calls and offer four services in one phone.

Speaking at a news conference, Mr. Abellan didn't give an exact target of how many users Telefonica Mexico, which operates under the Movistar brand, expects to add with its new suite of services. He said the goal is many millions of current users that the company hopes to poach from competitors like America Movil's local unit Telcel, as well as adding users new to the world of cellular phones and mobile Internet.

"A [cellular] telephone is practically in the basket of basic goods," Mr. Abellan said, adding that Telefonica wants to help Mexico close "the digital gap" it faces when compared with other Latin American nations like Brazil, Colombia and even Venezuela in terms of wireless penetration.

Telefonica also is investing heavily in infrastructure, with a new cellular tower going up every three hours, which builds on the strategic alliance signed last week with cellular provider Iusacell to share their national networks, the chief executive said.

The Telefonica network now covers 90% of the Mexican population, or about 100 million people, ending the "myth" that its coverage area is inferior to that of its competitors, said Mariano Moral, head of client services for Movistar Mexico. Telefonica is Mexico's No. 2 wireless provider, with about 20 million subscribers, or 22% of the market.

Mr. Abellan took several critical shots at Telcel and the controlling shareholder of America Movil, billionaire Carlos Slim, for what he called monopolistic practices and expensive pricing. Telcel has about 67 million subscribers, or 70% of the Mexican market. Mr. Abellan said that is the same percentage that Telcel had when Telefonica arrived in Mexico 12 years ago.

America Movil has responded to criticism about its pricing and market conditions by pointing to studies that show pricing in Mexico is on par with developed nations like the U.S.

Mr.

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